The Federal Reserve Board has ordered bank holding companies in Iowa, Wisconsin and South Carolina to use whatever resources are available to them to nurse their ailing bank subsidiaries back to health.
In enforcement orders issued last month and made public Tuesday, the Fed said that the boards of Ambank Holdings Inc. in Davenport, Iowa, Brogan Bancshares Inc. in Kaukauna, Wis., and CoastalSouth Bancshares Inc. in Hilton Head, S.C., have agreed to serve as sources of strength for their banks. Ambank's American Bank & Trust Co., Brogan's Bank of Kaukauna and CoastalSouth's CoastalStates Bank are all operating under enforcement orders from their primary regulators.
Among other stipulations, the orders prohibit the holding companies from paying dividends or take on new debt without Fed approval and require the companies to submit quarterly reports to the Fed detailing their banks' progress in complying with enforcement orders.
All three banks have been hit hard of late by defaults on real estate loans. American Bank & Trust, with $487 million of assets, has lost nearly $20 million and CoastalStates, with $372 million of assets, has lost more than $22 million since 2008 and both continue to struggle with high levels of past due loans, according to Federal Deposit Insurance Corp. data. The $90 million-asset Bank of Kaukauna was profitable through the first nine months of 2011, but its ratio noncurrent loans to total loans at Sept. 30 had more than doubled from the same period a year earlier, to 6.09%.